This is Lee Jae-Yong, known to the Western world as Jay Y. Lee. Jay is the grandson of the great Lee Byung-chul, the founder of Samsung. Normally, these types of people are lazy spoiled brats but not Jay. He’s actually done a lot to grow Samsung. In fact, you could say that he’s the guy who made Samsung into the multi-hundred billion juggernaut that they are today. But, this sort of wealth and power didn’t come clean.
It was the result of massive amounts of corruption. In fact, Jay was so corrupt that he got sentenced to prison twice. The first was a 5-year jail sentence for bribery and embezzlement and the second was a 2.5-year sentence for bribery.
Being the second richest man in Korea, I don’t think you’d be surprised to hear that Jay didn’t end up spending all that much time in prison but that was completely fine. The prosecution’s main goal wasn’t to put Jay behind bars but to remove him from power, and publicly exposing him did exactly that. For over 5 years, it seemed that the era of Jay Y Lee’s Samsung was officially over. But out of nowhere, in August of 2022, South Korean President Yoon Suk Yeol would pardon Jay.
And just two months later, Jay would return to Samsung as chairman, a position that he’s held ever since. Now, you might be jumping out of your seat to blame President Yoon Suk Yeol. Of course, he’s just another bought-out politician that’s controlled by the super-rich. Now, that could very well be true but what I can say is that the president didn't act alone.
You see, it was actually at America’s request that President Yeol decided to pardon Jay. So, here’s the story of Jay’s insane rise to power, his humiliating fall from grace, and his unexpected return to the throne.
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RISE TO POWER
Taking a look back, the story of Jay dates Rise To Power back to June 23, 1968, in Seoul, South Korea. At the time, Samsung was already a thriving business involved in a variety of industries from grocery exports and textiles to insurance, security, and retail.
But, while Samsung was already successful, they had yet to even enter the industries that they’re most known for today: electronics and appliances. And it would end up being Jay’s father, Lee Kun Hee, who would lead this evolution making him the chosen heir within the Samsung family. Jay on the other hand was just a small boy during all of this who was slowly working his way through the school system.
I don’t think you’d be surprised to hear that Jay ended up attending the prestigious Seoul National University, the same university that Sang Woo attended, where he majored in East Asian history. He followed this up with an MBA from Keio University before attending Harvard where he spent 5 years trying to get a PhD in Business Administration.
Unfortunately, though, he would never end up finishing and just stuck to the family business which he joined in 1991. Speaking of joining the family business, let’s just say that he had a royal welcome as he would join directly as Vice President of Strategic Planning at age 23. And shortly after this, he would be promoted to Chief Customer Officer, a C-suite position that was created specifically for Jay.
Obviously, Jay largely benefited from nepotism but that isn’t to say that Jay wasn’t talented in his own right. After all, it’s not like all of Samsung’s heirs have ended up as pivotal as Jay even though they all got cushy executive positions.
And the main reason for this is that Jay chose to focus on the right sector of Samsung. His sister, Lee Boo Jin, for example, went down the hospitality path and became the CEO of Hotel Shilla, a luxury Korean hotel chain associated with Samsung.
Similarly, his other sister, Lee Seo Hyun, went down the philanthropy route and became the leader of Samsung’s welfare foundation. Our boy Jay, however, had bigger ambitions and knew exactly where the future lay: electronics. This came in the form of 3 separate breakthroughs starting with memory chips. In 1999, Samsung developed the world’s first 1 GB NAND flash and they followed this up with a groundbreaking pace of innovation. 2 GB in 2002, 4 GB in 2003, 8 GB in 2004, 16 GB in 2005, 32 GB in 2006, and 64 GB in 2007.
Combine this rapid innovation with Samsung’s resources, power, and connections, and I don’t think you’d be surprised to hear that Samsung would end up as the king of memory. This would end up being really important as this business is what would eventually bail Jay out of jail. But this was just the beginning of Jay’s contributions to Samsung.
His next big contribution was TVs. Samsung didn’t necessarily create TVs that were better than the competition but what they did do was market TVs better than the competition. They attended all these tech events where they showed off massive TVs, stupidly high resolutions, and a bunch of marketing gimmicks. This included things like 3d tvs, curved tvs, OLED, QLED, neo-QLED, and who knows what else. This isn’t to say that all of these technology were just gimmicks.
OLED for example is awesome technology but what really sold this technology was Samsung’s phenomenal marketing which has given them the number 1 spot in the TV market for the past 17 years, and at the helm of all of it was Jay. But if you thought memory and TVs were big, you probably forgot that Samsung also dominates another industry: smartphones.
I don’t even think this one needs an explanation. Samsung has sold over 2 billion Galaxies itself. And according to Samsung, Jay has made invaluable contributions to these sectors of Samsung. So, it’s no wonder why Jay was next in line to take over the company but there would be a pretty big scare before this actually happened.
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LIKE FATHER LIKE SON
In 2008, Jay’s father, Lee Kun-hee, resigned from his position as chairman. Normally, this would be great news. Lee had just completed a legendary run as Samsung’s chairman and was retiring to make way for younger generations right? Well, that’s not exactly how this played out. Lee didn’t resign because he wanted to retire.
He resigned because he was forced to retire. You see, Lee was indicted on charges of tax evasion, and he would end up with a 3 year suspended sentence along with a $109 million fine. This itself was terrible publicity for Samsung but what they were really worried about was a potential political crisis. Prosecutors were also alleging that Samsung had bribed influential South Korean politicians, prosecutors, and bureaucrats.
And if this was proven in court, that would truly be a disaster. Looking to avoid this, Lee and several of his executives would resign which got the prosecutors to back off and drop the bribery charges. But while Lee was able to leave the situation pretty clean, the same could not be said about Jay. Lee had tarnished the family name making it very difficult for Jay to ever take over the company. But, this duo wasn’t gonna go down so easily. What they had to do was clear the family name and they were willing to go to any length to do so including bribing the president of South Korea: Lee Myung Bak.
Also, this isn’t just speculation or something. Lee Myung Bak would eventually be sentenced to 15 years in prison, partially for accepting this bribe and pardoning Lee Kun-hee. I think it’s safe to say that the former president regretted accepting this bribe but the same cannot be said about Lee Kun-hee. In 2010, Lee would return to Samsung as chairman as a pardoned man making the bribe quite worth it.
And now that Lee was back in charge, his son was also in the good graces of the company which would make Jay vice chairman in 2012. As you can see, these mega companies and their leaders have a billion different ways to get out of any situation. You get charged with tax evasion? No problem. You get charged with bribery? While Lee was able to get out of jail time, something he couldn’t get out of was health concerns.
In 2014, Lee would suffer a heart attack and though he did recover, this event would basically make Jay the de facto chairman of Samsung leading us into his own foray with the law. Given his family’s history, Jay was probably involved in several shady activities over the years but the crime that got him arrested was the bribery of another South Korean president: Park Geun-hye.
It turns out that Jay had offered $38 million worth of bribes to the president's friends and acquaintances to push through a merger. Samsung had no choice but to admit that they had indeed handed over this money but they would insist that it was merely a good-faith donation and that Jay had no idea that these people were connected to the president.
That was obviously complete and utter BS and unsurprisingly, Jay would be found guilty of perjury, embezzlement, and bribery leading to a 5 year prison sentence. Something else that isn’t surprising is that Jay never ended up spending 5 years in prison. After spending 1 year in prison, the Seoul High Court would magically reduce his sentence to 2.5 years and suspend it, meaning that he was let go.
Unfortunately for Jay though, the Supreme Court of South Korea would end up ordering a retrial which resulted in another 2.5-year prison sentence for Jay in early 2021. By this point, Jay had already pulled all the strings he could to minimize his stay in prison and all he could do was just put his head down and serve his sentence. That was until America decided to get involved.
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RETURN TO THE THRONE
If you’ve been following the tech world, Return To The Throne you’re probably familiar with the chip shortage that we went through recently. Whether you were buying a Tesla or a regular old refrigerator, you often had to wait several months or even more than a year just to get your product. And the main reason for this was the supply chain shortage, and more specifically, the chip shortage.
On one side, this was great for businesses as they could jack up prices and capitalize on limited supply. But on the other hand, they were missing out on a lot of demand simply because they couldn’t meet the demand. Not to mention, all of this was making President Joe Biden look pretty bad. So, America turned to Samsung and TSMC to fix this issue.
Unfortunately for them though, Lee Kun-hee would pass away in late 2020 meaning that Samsung needed a new leader to navigate this supply chain crisis. And who better for the job than the prodigy son with shady ethics: Jay Y Lee. How could they get Jay out of prison though? Easy, by leveraging the largest lobbying group in America: the United States Chamber of Commerce.
If you’re wondering who funds this lobbying group, well, they don’t disclose their donors, but some companies are transparent about their affiliation. This includes the likes of FedEx, Facebook, Microsoft, Cheron, Comcast, Ford, and Pfizer. So, yeah, a pretty powerful group. And in 2021, these guys would approach South Korean President Yoon Suk Yeol with “a proposal” to solve the global chip shortage.
This plan started off by getting Jay out of prison in August of 2021 on parole, just 7 months after he was sentenced for the second time. This parole, however, came along with a 5-year restriction on business activities, so Jay couldn’t just immediately return to Samsung but that was ok.
It was better for Jay to lay low for a while and wait for people to forget before returning anyway. And that’s exactly what would happen. 12 months after getting released, President Yoon Suk Yeol pardoned Jay in August of 2022. His reasoning was that Jay was simply too important to the Korean economy to be kept in jail. Outraged by this pardon, activists would protest on the streets but this didn’t stop Jay from returning as chairman in October of 2022.
Since then, memory chip prices have fallen off a cliff by as much as 53% actually. In fact, memory chip prices have fallen so much that Samsung’s own profits have fallen by 95% within just 1 year. Is this because of some strings that Jay pulled or just a result of the market naturally correctly?
We may never know but this doesn’t really matter for Jay or the lobbyists because things played out just fine for them. And that’s how a convict ended up as the new chairman of Samsung. Jay may be back but he’s definitely feeling the pain of falling memory chip prices and more importantly the era of peak smartphone.
